Texas leaders face legal hurdles in plan to expand Medicaid
Despite a recent Democratic sweep, state laws and new federal reporting rules complicate the path to covering over one million uninsured residents.
By Ella Cox ·
Elected Texas Governor Gina Hinojosa has made expanding Medicaid her top health policy priority. She aims to provide coverage to low-wage adults who currently fall into a gap between federal subsidies and state aid. The effort faces immediate legal and administrative challenges.
Hinojosa plans to direct state officials to submit an expansion plan to the federal government. However, a Texas law requires legislative approval for any change to Medicaid eligibility requirements. It is not yet clear if this statute prevents the governor from acting unilaterally through executive order.
The expansion would cost the state 10% of the total program cost. In exchange, the federal government would cover the remaining 90%. This arrangement would bring approximately $10 billion in annual federal funds to Texas. More than one million additional residents would gain health insurance coverage under this model.
New federal rules add complexity to the rollout. The One Big Beautiful Bill Act of 2025 mandates that Medicaid recipients under 65 work at least 80 hours per month. They must also earn the federal minimum wage, roughly $580 per month, to keep their coverage. States must now monitor these requirements, a task that costs some jurisdictions up to $15 million in added staff expenses.
State Representative Donna Howard of Austin said lawmakers are considering a trigger bill as an alternative. This legislation would activate expansion only if the new Democratic-controlled Congress repeals the strict federal work reporting rules. Howard noted that passing the bill now without those changes could undermine its goals.
Texas currently has the highest rate of uninsured residents in the nation. Sixteen percent of Texans lack health insurance, a total that exceeds five million people. The state’s minimum wage has remained frozen at $7.25 per hour for 17 years. Only 38% of small employers provide health insurance to their workers, leaving many low-income adults without employer-sponsored coverage.
Charles Miller of the nonpartisan think tank Texas 2036 stated that expansion would eliminate the coverage gap for working-age adults. He added that newly insured residents tend to seek more care and gain protection against medical debt. Hospitals and local governments would also benefit by reducing the hundreds of millions of dollars they currently spend on uncompensated care.
Hinojosa reiterated her commitment to the policy in Houston last week. She described the lack of insurance for children as a sin and said expanding Medicaid is the way to fix it. The state Senate remains controlled by Republicans, which may make passing the necessary legislative changes a difficult process.
